I have a general idea of what to do, but was wondering if there's something more to it that perhaps I'm not doing.

Generally, the way I usually do this is to make the dress (or skirt, in this case) and make it a conforming clothing item. Then, instead of inserting left and right thigh bones, I make everything past the waist part of the hip, and include helper pones to let me move the skirt sides forward, back and side to side.

This way, with the hip all one piece I can still use it in the cloth room if I wish. Do I have this right?

I'm not really sure what you're after exactly, but for turning a piece of clothing into hybrid:

 - make it conforming in any way you want, and ensure that's "well welded (A) and single sided (B)" as well as "wide enough (C)" for proper dynamic handling.

 - assign it to a sim in cloth room

 - any part you want to be driven by the sim shoud be in the (or in a) dynamic group. You have a main one, and can add additional ones yourself. Usually, they go with material zones so something which looks like leather behaves like leather, and something which looks like lace behaves like lace.

 - any part you want to be driven by conforming should be in the choreographed group.

That's basically it. The sim results simply supersede the results of conforming in an animation, on a per vertex basis - although for the vertices in the choreographed group these results are identical.

Everything else has to do with the proper implementation of the A,B,C conditions mentioned above, with dynamic parameters vs speed of scene movements, with handling contraint and decorated groups, with sim settings vs computing speed and more details alike.  

So, it does not take additional requirements to the bone structure of a dress to make it dynamic or hybrid. It's just that when you take out bones, you lose it's conforming properties and force the use of cloth room to get anything done out there, in any scene, for each use. Why should one want to do that?

You have it right, I have never added helper bones though, Steve

The helper bones are necessary (for me anyway) when I'm making a conforming dress or skirt. Hmm, what I may do is just what I've been doing and include a seperate object file for the dynamic dress. I like to try to get my models to sit occassionally, but most of V4's clothes were clearly intended for her to be walking or standing.

The helper bones are necessary (for me anyway) when I'm making a conforming dress or skirt. Hmm, what I may do is just what I've been doing and include a seperate object file for the dynamic dress. I like to try to get my models to sit occassionally, but most of V4's clothes were clearly intended for her to be walking or standing.

Getting conforming clothing to bend right for sitting or kneeling is a PITA. This is made worse by V4's default bending. 
I agree with you on the extra bones as they help some.